Riyadh cuts H1 budget deficit by 50pc
RIYADH: Saudi Arabia’s budget deficit halved in the first six months of this year, said the finance ministry yesterday, following sweeping spending cuts and a stabilisation in oil prices.
The ultra-conservative kingdom has moved to diversify its traditionally oil-dependent economy following a sharp fall in crude prices.
The budget deficit dropped by 51 per cent to 72 billion riyals (RM82.5 billion) in the first half of this year, the ministry announced.
“This result reflects an improvement in the management of public finances as a result of economic reform introduced through Vision 2030,” said Saad al-Shahrani, a high-ranking ministry official.
The Vision 2030 plan, announced by the kingdom last year, aims to develop Saudi Arabia’s industrial and investment base and boost small and medium businesses to create local jobs and reduce reliance on oil revenue.
It is the second budget report released by Riyadh since the authorities announced in May they would begin issuing the figures on a quarterly basis to boost transparency.
The kingdom has regularly posted budget deficits since 2014, following a slump in oil prices.
Saudi Arabia, the world’s largest crude exporter, in December projected a budget deficit of US$53 billion (RM227.8 billion) for this year. Revenues for the first half of the fiscal year were up 29 per cent to 308 billion riyals from the same period last year.
Spending in the first six months dropped 2.0 per cent to 380.7 billion riyals.
As part of its reforms, Saudi Arabia is due to introduce valueadded tax (VAT) early next year along with the United Arab Emirates and Qatar.
Riyadh announced in June it had begun taxing foreigners working in the private sector as part of its fiscal reforms.
The country is also preparing to sell just under five per cent of energy giant Aramco next year.
Saudi Arabia raised US$17.5 billion in its first international bond offering in October last year. AFP
Saudi Arabia, through its Vision 2030 plan, aims to develop its industrial and investment base and boost small and medium businesses to create jobs and reduce reliance on oil revenue.